all the decisions, the best view seems to be that the legal right is against the agent with whom the contract was in terms made, but that the law permits in substitution for the right against the agent a corresponding right against the principal. Under this view affirmative action is necessary to effect the substitution of the new right for the old. The plaintiff, therefore, must manifest within a reasonable time an election to hold the principal or the right to charge him will be lost.31 But no delay or conduct will discharge the principal until the plaintiff has both learned that the agent was such, and also has discovered the principal for whom the agent was acting.32 After such knowledge, any conduct on the part of the plaintiff which indicates an intention to hold the agent only, will be a discharge of the principal. But the manifestation of an intent to hold the agent, as by bringing action against him,33 does not necessarily indicate an election to let the principal go free though it is doubtless evidence of such an election. And where an action against an agent and an attachment of his property were prosecuted after full knowledge of the principal's liability, it was held in the absence of fraud or mistake, an irrevocable election. Even partial payment will not necessarily be conclusive.35 Taking negotiable paper of one party or the other the close of the evidence. Williams v. O'Dwyer & Ahern Co., 127 Ark. 530, 192 S. W. 899; Gay v. Kelley, 109 Minn. 101, 123 N. W. 295; Tew v. Wolfsohn, 77 N. Y. App. Div. 454, 79 N. Y. S. 286, affd., 174 N. Y. 272, 66 N. E. 934. 31 Smethurst v. Mitchell, 1 E. & E. 622. 32 Thomson v. Davenport, 9 B. & C. 78; Curtis v. Williamson, L. R. 10 Q. B. 57; Merrill v. Kenyon, 48 Conn. 314, 40 Am. Rep. 174; Raymond v. Crown, etc., Mills, 2 Metc. 319; Estes v. Aaron, 227 Mass. 96, 99, 116 N. E. 392. See also Steele-Smith Grocery Co. v. Potthast, 109 Ia. 413, 80 N. W. 517; Gay v. Kelley, 109 Minn. 101, 123 N. W. 295, 26 L. R. A. (N. S.) 742; Remmel v. Townsend, 83 Hun, 353, 31 N. Y. S. 985; Georgi v. Texas Co., 225 N. Y. 410, 122 N. E. 238. 33 Curtis v. Williamson, L. R. 10 Q. B. 57; Ferry v. Moore, 18 Ill. App. 135; Steele-Smith Co. v. Potthast, 109 Ia. 413, 80 N. W. 517; Jones v. Johnson, 86 Ky. 530, 6 S. W. 582; Hoffman v. Anderson, 112 Ky. 893, 67 S. W. 49; Raymond v. Crown, etc., Mills, 2 Metc. 319; Estes v. Aaron, 227 Mass. 96, 100, 116 N. E. 392; Cobb v. Knapp, 71 N. Y. 348, 27 Am. Rep. 51; Tew v. Wolfsohn, 77 N. Y. App. Div. 454, 79 N. Y. S. 286, affd. 174 N. Y. 272, 66 N. E. 934; Daggett v. Champlain Mfg. Co., 71 Vt. 370, 45 Atl. 755. 34 Barrell v. Newby, 127 Fed. 656, 62 C. C. A. 382. See also Booth v. Barron, 29 N. Y. App. Div. 66, 51 N. Y. S. 391; Love v. St. Joseph Stock Yards Co. (Utah), 169 Pac. 951. 35 Jones v. Johnson, 86 Ky. 530, 6 S. W. 582. After discovery of the prin for the claim is not, as matter of law, a decisive election.36 Nor is merely charging the goods to the agent or demanding payment from him after discovery of the principal.37 The question resolves itself into one of fact. Did the plaintiff with full knowledge elect to rely solely upon the credit of either the agent or the principal? If, however, judgment is taken against either with knowledge of the facts no claim can thereafter be asserted against the other although the judgment is unsatisfied. 38 And a settlement of the claim with the agent and release of him has the same effect.39 But a judgment against the agent taken before disclosure of the facts of the agency will not bar a subsequent action against the principal. 40 cipal a claim was made on the insolvent estate of the agent and a small dividend paid. The court nevertheless allowed a subsequent action against the principal. In Hoffman v. Anderson, 112 Ky. 893, 67 S. W. 49, the facts were the same except that the claim was presented against the principal's estate and a subsequent action was allowed against the agent. 36 See Atlas Steamship Co. v. Colombian Land Co., 102 Fed. 358, 42 C. C. A. 398. But in Ames Packing Co. v. Tucker, 8 Mo. App. 95, the court held that though taking negotiable paper in Missouri is presumably conditional only, it was, nevertheless, a conclusive election to take the individual note of the agent without taking at the time of the transaction any steps showing an intent to hold the principal. 37 Dyer v. Swift, 154 Mass. 159, 28 N. E. 8. 38 Priestly v. Fernie, 3 H. & C. 977; Morel v. Westmorland, [1904] A. C. 11; Cross v. Matthews, 91 L. T. (N. S.) 500; Barrell v. Newby, 127 Fed. 656, 62 C. C. A. 382; Eufaula Grocery Co. v. Missouri Nat. Bank, 118 Ala. 408, 24 So. 389; Jones v. Etna Insurance Co., 14 Conn. 501; Mussenden v. Raiffe, 131 Ill. App. 456; Jones v. Johnson, 86 Ky. 530, 6 S. E. 582; E. J. Codd Co. v. Parker, 97 Md. 319, 55 Atl. 623; Kingsley v. Davis, 104 Mass. 178; Weil v. Raymond, 142 Mass. 206, 7 N. E. 860; Murphy v. Hutchinson, 93 Miss. 643, 48 So. 178, 21 L. R. A. (N. S.) 785; Sessions v. Block, 40 Mo. App. 569; Lears v. Cella (Mo. App.), 186 S. W. 1150; Tuthill v. Wilson, 90 N. Y. 423; Georgi v. Texas Co., 225 N. Y. 410, 122 N. E. 238; Lage v. Weinstein, 35 N. Y. Misc. 298, 71 N. Y. S. 744; Rounsaville v. North Carolina Home Ins. Co., 138 N. C. 191, 50 S. E. 619; Pittsburg Plate Glass Co. v. Roquemore (Tex. Civ. App.), 88 S. W. 449. See, however, the contrary decision of Beymer v. Bonsall, 79 Pa. 298; also McLean v. Sexton, 44 N. Y. App. Div. 520, 60 N. Y. S. 871. 39 Orvis v. Wells, 73 Fed. 110, 19 C. C. A. 382; Booth v. Baron, 29 N. Y. App. D. 66, 51 N. Y. S. 391; Love ». St. Joseph's Stock Yards Co. (Utah), 169 Pac. 951. 40 Auto Parts Co. v. Roberts, 194 Ill. App. 417; Lindquist v. Dickson, 98 Minn. 369, 107 N. W. 958, 6 L. R. A. (N. S.) 729; Greenburg v. Palmieri, 71 N. J. L. 83, 58 Atl. 297; Georgi v. Texas Co., 225 N. Y. 410, 122 N. E. 238; Brown v. Reiman, 48 N. Y. App. D. 295, 62 N. Y. S. 663. It is somewhat difficult to see why the claim is not merged in the judgment. In § 290. Undisclosed principal, rather than his agent is entitled to enforce the contract. In enforcing the contract against a third person, the principal's right is superior to the agent's and the assertion of a right by the principal to enforce the contract abates the agent's right.41 § 291. Defences to actions by an undisclosed principal. As the doctrine by which an undisclosed principal is given rights and subjected to liabilities under a contract made professedly with another is somewhat artificial, and is adopted for the promotion of justice, courts will so limit the doctrine as to advance the ends of justice; and, therefore, will allow defences to.actions by and against the principal when the situation is such as to make it equitable. Thus in an action by the principal against the person with whom the agent contracted, the defendant is entitled to take advantage of any settlement made with the agent while still believing him to be a principal; 42 or to set off against the undisclosed principal a debt due from the agent on another account, 43 unless the debt was created after the agency was disclosed.44 But if the defendant knew that the agent was acting as such, though his principal was not named, a set-off of claims against the agent cannot be made against the principal. 45 "The buyer must be cautious, and not act regardless of the all other cases where the plaintiff is allowed to charge the principal, he thereby loses his right against the agent. But though a defence may arise to a judgment actually recovered against the agent, the judgment itself cannot be cancelled by a suit against the principal or a judgment in that suit. The court is in reality allowing at law what might more logically be achieved by a rescission in equity of the first recovery. Cf. other cases of election, infra, §§ 683, 684, 736, 1304, 1374, 1407, 1464, 1524, 1594. 41 Sadler v. Leigh, 4 Campb. 195; Warder v. White, 14 Ill. App. 50; Pitts v. Mower, 18 Me. 361, 36 Am. Dec. 727; Huntington v. Knox, 7 Cush. 371; Norcross v. Pease, 5 Allen, 331. 42 Doucette v. Baldwin, 194 Mass. 131, 135, 80 N. E. 444. 43 Rabone v. Williams, 7 T. R. 360 (note a); George v. Clagett, 7 T. R. 359; Borries v. Imperial Ottoman Bank, L. R. 9 C. P. 38; Montagu v. Forwood, [1893] 2 Q. B. 350; Beatty v. Heath (Mo. App), 183 S. W. 1102; Hudgins Produce Co. v. Beggs (Tex. Civ. App.), 185 S. W. 339. See Lime Rock Bank v. Plimpton, 17 Pick. 159. 44 Norcross v. Pease, 5 Allen, 331. 45 Hornby v. Lacy, 6 M. & S. 166. rights of the principal, though undisclosed, if he has any reasonable grounds to believe that the party with whom he deals is but an agent. Hence, if the character of the seller is equivocal, if he is known to be in the habit of selling sometimes as principal and sometimes as agent, a purchaser who buys with a view of covering his own debts and availing himself of a set-off is bound to inquire in what character he acts in the particular transaction; and if the buyer chooses to make no inquiry, and it should turn out that he has bought of an undisclosed principal, he will be denied the benefit of his set-off."46 Even though the claims against the agent which the defendant seeks to set off against the principal were acquired after the transaction with the agent, and indeed after the agent ceased to represent the principal, the claims may, nevertheless, be set off against the principal if, when they were acquired, the existence of the principal was still undisclosed.47 Further, if agents make a single sale of goods belonging in part to themselves and in part to a principal whose existence is not disclosed, since the contract is indivisible, the principal cannot sue for the proportion of the price payable on the goods which belong to him. 48 The same principles are applicable to any other defences. If good against the agent, they are good against the principal. 49 But defences acquired through dealing with the agent after notice from the principal of his rights cannot be used by the other party.50 Nor can he use against the principal any defence against the agent where he has such knowledge in regard to the agency as to make it a fraud for him to assert the defence. 51 46 Miller v. Lea, 35 Md. 396, 406, 6 Am. Rep. 417. See also Cooke v. Eshelby, 12 A. C. 271; Baxter v. Sherman, 73 Minn. 434, 76 N. W. 211, 72 Am. St. Rep. 631. 47 Stebbins v. Walker, 46 Mich. 5, 8 N. W. 521. 48 Roosevelt v. Doherty, 129 Mass. 301, 37 Am. Rep. 356. 49 Semenza v. Brinsley, 18 C. B. (N. S.) 467; Mildred v. Maspons, 8 A. C. 874; Lane v. Leiter, 237 Fed. 149, 150 C. C. A. 295; Amann v. Lowell, 66 Cal. 306, 5 Pac. 363; Peel v. Shepherd, 58 Ga. 365; Baltimore Tar Co. v. Fletcher, 61 Md. 288; Illsley v. Merriam, 7 Cush. 242, 54 Am. Dec. 721; Houghton v. J. W. Hundley Co. (Okl.), 157 Pac. 1142. 50 Norcross v. Pease, 5 Allen, 331. 51 Mildred v. Maspons, 8 A. C. 874; Childers v. Bowen, 68 Ala. 221; Miller v. Lea, 35 Md. 396, 6 Am. Rep. 417; McLachlin v. Brett, 105 N. Y. 391, 12 N. E. 17; Frame v. William Penn Coal Co., 97 Pa. 309. § 292. Defences to actions against an undisclosed principal. There is considerable confusion of authority in regard to the question whether settlement by the principal with his agent before the person with whom the agent dealt makes a claim upon the principal is a defence to the latter. The decision of the controversy depends upon whether the liability of an undisclosed principal is to be regarded as an absolute right of one who deals with the agent although confessedly the credit of the agent has been exclusively relied upon, or whether, on the other hand, a person who thus deals with an agent is to be given only such limited right against the undisclosed principal as is consistent with equity. If the first of these theories is sound, the person dealing with the agent cannot be deprived of his right against the principal unless in some way he has subjected himself to an estoppel by misleading the principal. If, however, the second theory is sound, the mere fact that the principal has innocently put himself in a situation where hardship will be caused by holding him liable on the agent's contract should be a defence. The English court has wavered somewhat uncertainly between these two views. The earliest decision on the subject 52 adopted the second theory and held that recovery from the principal was "subject, however, to this qualification, that the state of the account between the principal and the agent is not altered to the prejudice of the principal." This rule is supported perhaps by the weight of authority in the United States, 53 but has now been much modified in England, the first of the two theories suggested above having been adopted by a later decision in the middle of the last century, and the principal held liable unless the plaintiff in some way had misled the principal. 54 52 Thomson v. Davenport, 9 B. & C. 78. 53 Fradley v. Hyland, 37 Fed. 49, 2 L. R. A. 749; Clealand v. Walker, 11 Ala. 1058, 46 Am. Dec. 238; Ketchum v. Verdell, 42 Ga. 534; Price-Evans Foundry Co. v. Southern Bell T. & T. Co., 19 Ga. App. 264, 91 S. E. 283; Thomas v. Atkinson, 38 Ind. 248; Emerson v. Patch, 123 Mass. 541; Cheever v. Smith, 15 Johns. 276; 54 Heald v. Kenworthy, 10 Exch. |